Discretionary Allocations Stifling Oil Industry’s Growth – Ezekwesili

A former Minister of Solid Minerals, Dr. Oby Ezekwesili, has said the discretionary award of oil licences is bringing about mediocrity in the nation’s oil and gas industry and stifling its growth.

She stated this in Lagos on Monday at the first National Education Summit organised by the Oil and Gas Trainers Association of Nigeria to tackle the challenges and explore the prospects of sustaining local content through quality education and training.

The former Education minister, who chaired the event, noted that the Local Content Act was aimed at developing local capacities and competencies in the oil industry.

She said, “One of the things that NEITI (Nigerian Extractive Industries Transparency Initiative) entrenched in the oil and gas industry was the idea that we must avoid discretionary allocation of the right to explore for oil in the country.

“The discretionary allocation system led to mediocrity, incompetence and the stifling of the sector. That discretionary practice was the harbinger of grand corruption in this country.”

The Petroleum Act, 1969 (as amended), gives full authority or discretion to the Minister of Petroleum to grant licences for the exploration, prospecting and mining of oil, and empowers the President to “cause the farm-out of a marginal field” if it has been left unattended for a period of not less than 10 years from the date of its first discovery.

Ezekwesili said the system of auctioning and licence options were entrenched to put an end to discretionary allocations.

Noting that the marginal fields programme was meant to expand local participation in the industry, she stated, “I recall how it was at that time that people who were in politics assumed marginal fields and were simply going to be distributed to all who clapped at the village square.

“But having entrenched the principle of transparency through NEITI, we simply said ‘no, this isn’t going to be’. Because if you look at your local content as your prebends for settling your political elite, then what you do is that you kill a technical sector on the altar of politics.”

“I pray that our local content policy will not suffer stifling simply because it is not anchored on the obvious vision, which is that economic impact of the sector be extended beyond the operators, who have connections of one kind or the other, to people who hold high political offices.”

The Group Managing Director, Nigerian National Petroleum Corporation, Dr. Maikanti Baru, called on relevant stakeholders to support the academia by collaborating with it to foster economic growth and development in the country.

He said the oil industry could offer a route to maximise the use of innovative ideas of the academia through the transfer of technology and to augment the required investment support of the academia.

Baru stated, “Nigerian academia and the oil and gas industry are increasingly finding it mutually beneficial to collaborate, but there is still a lot to be achieved in this regard.

“Therefore, the need for the Nigerian academia to adjust their system and give credence to research and innovation so as to attract investment of the oil and gas industry cannot be over-emphasised.”

The President, OGTAN, Dr. Mayowa Afe, noted that progress had been made towards local content development, citing the Egina Floating, Production, Storage and Offloading unit as an example.

He said critical stakeholders were assembled to help provide new insights and solutions to “the ever-constant issues and challenges facing our education system, thereby making our graduates employable in the oil and gas industry after graduation.”